What DBA Means for Businesses: Does Your Company Need It?

A DBA simply stands for "doing business as," and you'll file a DBA when you want to conduct business under a name of your choosing. DBAs provide flexibility for both sole proprietors and larger corporations. Without a legal background, it's tough to navigate filings and regulations, so we've compiled a guide that breaks down what you should know about DBAs, giving you more time to grow your business.

What Is a DBA?

DBAs allow for businesses to operate under a chosen name. Many wonder why filing a DBA is even necessary, but keep in mind that conducting business under an unregistered name is illegal.

If you have a sole proprietorship or a general partnership, you are legally required to operate under your personal name. For example, if John Doe had a car washing business and it was a sole proprietorship, it'd operate under the name of John Doe rather than a name he'd like to operate under like John Doe's Carwash. In order for either a sole proprietorship or a general partnership to use a fictitious name of their choosing, they'd have to file a DBA. Don't ignore this and simply start using a custom business name as operating in an illegal manner can have significant legal ramifications.

Difference Between a DBA and an LLC

DBAs are filings that, when registered, mean a sole proprietorship, general partnership or LLC is operating under a fictitious name. It does not register a business as a separate legal entity. A limited liability company (LLC) does exactly that, and it can provide numerous legal protections like removing personal assets from business liabilities.

Forming an LLC will be more costly, both in terms of money and time, than filing a DBA, which can be filed within minutes and will usually cost less than $200. Also, when you form an LLC, you'll have the opportunity to register your business under a name of your choosing. However, registering a name under an LLC is more complicated than registering under a DBA. When forming an LLC, you'll likely need to hire an attorney and go through multiple filings. This process is much longer and complex than filing a DBA, which usually only requires submitting one form by yourself.

Additionally, business owners can choose how they want to be taxed when forming an LLC. They can choose to be taxed as a sole proprietorship, corporation or partnership. However, business owners under a DBA do not have that flexibility and will continue to be taxed under whatever their current tax status is.

Benefits to Filing a DBA

Despite the relatively simple purpose of a DBA, it has multiple benefits.

Conduct business under a chosen name: Sole proprietors and general partnerships are required to conduct business under their personal names. So if your name is John Doe and you're operating your own home design business as a sole proprietor, you won't be able to officially call your name John Doe Home Design. You'll have to transact under John Doe. Filing a DBA takes care of that issue. If your business is incorporated, you won't have to worry about this as you'll be able to choose your own name when you incorporate. Sole proprietors are the most common applicants.

Don't know if your business is incorporated? Your secretary of state's website should include a search function where you can find incorporated businesses.

Business banking: Most banks require an Employer Identification Number (EIN) if you are looking to open a business checking account. You can obtain an EIN quite easily if you register your business with your secretary of state or if you file a DBA.

In addition, some clients, partners or lenders require that sole proprietors and general partnerships have DBAs filed before doing business with them.

Scale your business: If you currently or ever plan to operate multiple businesses under a single umbrella entity, a DBA can make things easy for you. Say you own a restaurant but now want to open an ice-cream shop. The two likely can't function under the same name, so you'll have to file a DBA to own two separate registered businesses with different names.

Things a DBA Won't Do

While filing a DBA will provide your business with some benefits, don't assume that it will do any of the following.

Provide legal protections: A DBA is not the same as an LLC. LLCs and similar corporate structures provide your business with a suite of legal protections and help remove personal assets from business liabilities. A DBA is essentially just the ability to operate under a fictitious name. DBAs do not provide additional protections.

Grant naming rights: Depending on your county or state, a DBA will not protect your business's name. Typically, you'll need to incorporate your business in order to protect the name of your choosing. Also, even if your local county or state protects your business's name with a DBA, it does not mean that the name is protected outside of the county or state in which you filed the DBA.

How to File a DBA

Filing a DBA is incredibly easy, especially compared to other complicated legal forms and registrations, so the good news is that you likely won't need a lawyer. The exact process will differ by local regulations, but you'll likely have to fill out some paperwork with your local county or state. Application fees typically range from $10 to $200.

You won't be able to file with a name that includes "LLC" or "Inc." unless your company is set up as an LLC or corporation, respectively. Before settling on a name, research it to be sure no one else in your area does business under that name.

After filing, you should hear back from the approving body within six weeks. That will give you the green light to operate under your new name. You may need to give public notice of your business by advertising locally, and you may need to renew your DBA annually.

Does My State Require a DBA?

Almost every state requires that a business file a DBA if it wants to conduct business under a name that is different from their currently registered one. This usually applies to all companies. Even if your local county or state doesn't require a DBA for a business to operate under a fictitious name, we'd always recommend filing one, as DBAs can provide other benefits. The following states do not require DBAs to operate under a fictitious name.

Frequently Asked Questions (FAQs) About DBAs

What does it mean to have a DBA?

DBA means "doing business as," and filing a DBA allows for a business to officially operate under a name of the owner's choosing.

What is the difference between an LLC and a DBA?

Doing business as (DBA) refers to businesses that operate under a fictitious name, while limited liability company (LLC) refers to legal entities that are entirely separate from business owners. LLCs offer far more legal protections to business owners than DBAs do.

Is a DBA a legal entity?

No. A DBA simply means that a business is operating under a name of their choosing.

Can a DBA have a tax ID number?

A DBA is not a legal entity and cannot have its own tax ID number. However, a business operating under a DBA can have its own tax ID.

Can I turn my DBA into an LLC?

Yes. The business owner would need to follow the steps to register their business as an LLC, which is a more time-consuming and extensive process than filing a DBA.

How much does a DBA cost?

DBA filing costs differ by state but typically range from $10 to $200. There may be applicable renewal fees every several years as well.

Do I need a separate bank account for a DBA?

The answer is dependent on the bank that you use. Some banks require separate bank accounts for businesses with different names, but this isn't always the case. In most cases, separate bank accounts are only required for separate tax ID numbers.

Do I need a DBA if I use my own name?

If you are a sole proprietorship, you are legally required to operate under your name unless a DBA is filed. Depending on the state and type of business conducted, filing a DBA isn't usually necessary. But if you plan on operating under a different name than your personal name, either an LLC or DBA is required.

What does a DBA allow you to do?

DBAs primarily allow for businesses to operate under a fictitious name. There are additional minor benefits that can be found here.

Are DBAs and sole proprietorships the same?

No, a DBA isn't a legal entity itself and simply allows for businesses like sole proprietorships to operate under a different name.

Is DBA a business license?

No, a DBA is not a business license and it simply allows for businesses to operate under a different name. There are several different types of business licenses, and you'd need to check with local municipality, state and federal laws to see which ones your specific business would need to apply for.

Where can I get a DBA?

DBAs are usually filed through your county clerk's office. If you're unsure of how to find your county clerk, check your local secretary of state's office.